The Sentix research group's index tracking morale among investors in the eurozone slumped to 2.7 in August, its lowest level in a year, from 10.1 in July. The consensus forecast in a Reuters poll had been for the sentiment index to ease slightly to 9.0.

"After last month's recovery the eurozone Sentix index has suffered a painful setback," Sentix said in a statement, attributing it to sharply reduced growth expectations because of the sanctions.

"As this slump derives from an event which is subject to politics and power play, the central banks, particularly the European Central Bank, will have difficulty in trying to counter this," Sentix added.

The report notes that Germany, in particular, is seeing a sharp downturn.

Sentix

It should be noted that by and large, the sanctions that have been imposed on Russia are not considered to be that steep. And yet already signs of pain are being felt in Europe. No wonder no true action is likely to be taken against Putin.